Why Family Trustees need Liability Insurance

The UK Chancellor’s Autumn Budget has reignited discussions around inheritance tax (IHT) and family trusts.

With new changes to IHT relief on agricultural and business assets taking effect in April 2026, family trusts are set to play an even more prominent role in succession planning.

But while family trusts offer a vital way to manage wealth and secure generational legacies, they also come with significant responsibilities – and risks – for trustees.

The guardians of generational wealth

Being a trustee is an honour, but it’s no small feat. Trustees hold the keys to assets that may represent a family’s legacy or even its livelihood.

From managing farmland to safeguarding shares in a family business, trustees must balance competing priorities, navigate complex legal obligations and often make decisions that won’t please everyone.

Now add to that the sobering reality of personal liability. Trustees are jointly and severally liable, which means they could face serious, personal, financial consequences if something goes wrong.

In light of this responsibility, trustees need to be as well-prepared as possible.

What could go wrong?

Even the most diligent trustee isn’t immune to disputes or errors. Imagine these scenarios:

• The unhappy beneficiary: A decision you make, however well-intentioned, doesn’t sit well with one of the beneficiaries. A claim of negligence is filed, and you could suddenly be looking at legal fees of £200 per hour, minimum.
• A missing exoneration clause: You check the trust deed, only to discover there’s no exoneration clause to protect you – or worse, the clause is defective or doesn’t cover the issue at hand. Now, you could be personally liable for any financial settlement.
• The unintended oversight: Despite taking professional advice, a mistake occurs. The trust suffers financial losses, and you could be in the firing line for making up the shortfall.

It’s easy to see how quickly a trustee’s role can turn from rewarding to ruinous.

The safety net: family trust liability insurance

This is where our partnership with Rokstone Underwriting comes in. Family trust liability insurance offers a tailored safety net for trustees, ensuring you can carry out your duties with peace of mind.

What makes this insurance different?

• Financial protection for trustees: The legal costs and settlements arising from claims of negligence or breach of trust are covered.
• Beyond exoneration clauses: Protection is provided even if exoneration clauses in the trust deed are missing, limited or ineffective.
• Support for the trust itself: The trust’s assets are safeguarded from financial losses, protecting the legacy you’ve been entrusted to manage.

Why generic insurance isn’t enough

While it might be tempting to rely on a Directors’ and Officers’ (D&O) policy, these are not designed for the unique challenges of trusts.

Family Trust Liability Insurance goes beyond generic coverage, addressing trust-specific risks and providing comprehensive protection that standard policies often exclude.

Peace of mind in changing times

As the IHT landscape shifts, family trusts are once again in the spotlight.

For trustees, this is an opportunity to step up and ensure these trusts continue to deliver for future generations. It’s also a reminder of the risks trustees face.

In a world where one dispute or error could upend everything, Family Trust Liability Insurance can offer you the protection you need.